IPO: GPT Healthcare

GPT Healthcare, a hospital chain owner, launched its IPO (initial public offering) on February 22, 2024. Here's a breakdown of the company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality: Its three-year average ROE and ROCE are 22 per cent. It also reported positive cash flow from operations in each of the last three financial years. Growth: Its revenue grew 22 per cent annually in the last three years. Its profit after tax grew 36 per cent annually in the same period. Valuation: The stock is valued at a P/E and P/B of 33.5 and 7.2 times, respectively. Overview: Low penetration in the Eastern Indian market offers a long growth runway. Rising healthcare spending and health insurance penetration should drive growth. It plans to open two new hospitals in Ranchi and Raipur. It has also stated that it will expand its operation in four new cities. However, high capital requirements and intense competition from both listed and unlisted players may pose a threat going forward. About GPT Healthcare GPT Healthcare owns and operates several hospitals under the brand name ILS. It primarily focuses on secondary (treatment from specialists) and tertiary care (a higher level of specialised medical care). Strengths of GPT Healthcare Presence in underpenetrated geography. It is a relatively known brand in Eastern India, operating four hospitals with a total capacity of 561 beds. Note that the Eastern Indian market is comparatively underpenetrated compared to other regions. As of 2020, East India had only five doctors and 13 nurses per 10,000 individuals. Weaknesses of GPT Healthcare High competitive intensity. It faces stiff competition from players with higher bed capacity. The hospital business has high capital requirements . IPO details Total IPO size (Rs cr) 525.1 Offer for sale (Rs cr) 485.1 Fresh issue (Rs cr) 40 Price band (Rs) 177-186 Subscription dates Feb 22 to Feb 26, 2024 Purpose of issue Offer for sale, Repayment of loan Post IPO M-cap (Rs cr) 1526.2 Net worth (Rs cr) 212.7 Promoter holding (%) 65.6 Price/earnings ratio (P/E) 33.5 Price/book ratio (P/B) 7.2 Financial history Key financials 2Y CAGR (%) TTM FY23 FY22 FY21 Revenue (Rs cr) 21.9 393 361 337 243 EBIT (Rs cr) 26.3 71 59 60 37